Case Scenario: Safeco Insurance Company and GEICO. General Insurance Company issued automobzle msurance policies to three applicants without telling them that the companies had obtained credit reports on the a licants. One applicant filed a lawsuit against Safe co a two applicants sued GEICO under the Fazr Credzt Reporting Act. The cases reached the Supreme Court and were consolidated for deczszon. SOUTER, J.: The Fair Credit Reporing Act requires notice to any consumer subjected to . adverse action ... based in whole or 111 part on any mormation contained in a consumer credit report." Anyone who "willfully fails" to provide notice is civilly liable to the consumer. The questions in these consolidated cases are whether willful failure covers a violation committed in reckless disregard of the notice violation, and, if so, whether petitioners Safeco and GEICO committed reckless violations. We hold that reckless action is covered, that GEICO did not violate the statute, and that while Safeco might have, it did not act recklessly. Congress enacted the Act in 1970 to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy. The Act requires among other things, that "any person who takes any adverse action with respect to any consumer that is based in whole or in part on any information contained in a consumer report" must notify the affected consumer.

The notice must point out the adverse action, explain how to reach the agency that reported on the consumer's credit, and tell the consumer that he can get a free copy of the report and dispute its accuracy with the agency. As it applies to an insurance company, "adverse action" is "a denial or cancellation of, an increase in any charge for, or a reduction or other adverse or unfavorable change in the terms of coverage or amount of, any insurance, existing or applied for." In GEICO's case, the initial rate offered to Edo [one of the applicants] was the one he would have received if his credit score had not been taken into account, and GEICO owed him no adverse action notice under the Act. Safeco did not give Burr and Massey (the other applicants) any notice because it thought the Act did not apply to an initial application, a mistake that left the company in violation of the statute if Burr and Massey received higher rates "based in whole or in part" on their credit reports; if they did, Safeco would be liable to them on a showing of reckless conduct (or worse). The first issue we can forget, however, for although the record does not reliably indicate what rights they would have obtained if their credit reports had not been considered, it is clear enough that if Safeco did violate the statute, the company was not reckless in falling down in its duty. While "the term recklessness is not self-defining," the common law has generally understood it in this sphere of civil liability as conduct violating an objective standard: action entailing "an unjustifiably high risk of harm that is either known or so obvious that it should be known." There being no indication that Congress had something different in mind, we have no reason to deviate from the common law understanding in applying the statute.

Thus, a company subject to the Act does not act in reckless disregard of it unless the action is not only a violation under a reasonable reading of the statute's terms, but shows that the company ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless. Here, there is no need to pinpoint the negligence/recklessness line, for Safeco's reading of the statute, albeit erroneous, was not objectively unreasonable. The Court of Appeals correctly held that reckless disregard of a requirement of the Act would qualify as a willful violation within the meaning of the Act. But there was no need for that court to remand the cases for factual development. Geico's decision to issue no adverse action notice to Edo was not a violation of the Act, and Safeco's misreading of the statute was not reckless. The judgments of the Court of Appeals are therefore reversed in both cases, which are remanded for further proceedings consistent with this opinion.

1. What does it mean to say these cases were "consolidated," and why do you think they were consolidated?

2. Burr and Massey sued Safeco, alleging Safeco was reckless in its reading of the Act. Although not explained 111 this case excerpt, they could have sued Safeco under the Act for negligence instead. Why do you think they sued for recklessness instead of negligence?

3. Why did the Supreme Court determine that neither insurance company was liable in these cases.